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(F) Six-month continuously compounded rate of interest is 4% p.a. and the six- month forward price (F) of KMN bank stock is AUD 38. The

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(F) Six-month continuously compounded rate of interest is 4% p.a. and the six- month forward price (F) of KMN bank stock is AUD 38. The stock pays no dividends. You are given that the price of an European style put option P(K) is AUD 3. What is the maximum possible strike price K, that is consistent with the absence of arbitrage? (05 Marks)

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